Nio Warns of Shortfall Ahead

When Nio (NYSE:NIO) posted an earnings and revenue beat, the ~ 3% rise will disappoint investors. The stock price is looking ahead, not in the past, where supply chain issues will hurt results.

In the first quarter, Nio posted non-GAAP EPS of a four-cent loss. GAAP EPS of $0.48 is a concern. Nio is not yet profitable, so investors should continue treating the electric vehicle stock as speculation. For 2Q21, Nio forecast revenue of up to $1.29 billion. It will deliver between 21,000 and 22,000 units. This is a year-on-year increase of up to 113%.

At close to a $70-billion market capitalization, Nio shares already more than priced in its historical growth. The parts shortage is a bigger headwind. CEO William Li said, "The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage."

The shortage spells trouble for Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI), too. Tesla's (NASDAQ:TSLA) stock is not reacting, though. As prices rise on supply, Tesla is in the best position to take market share while other competitors get shut out. Tesla has a global network, factories across different geographies, and a fan base.

Your Takeaway

Nio is speculative now. Investors should consider selling shares now and waiting for the bear phase to end.